BU XIAONAN v. ORACLE SYSTEMS HONG KONG LTD

HCLA 7/2019

[2019] HKCFI 2828

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

LABOUR TRIBUNAL APPEAL NO 7 OF 2019

(ON APPEAL FROM LABOUR TRIBUNAL CLAIM NO 93 OF 2018)

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D E C I S I O N

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The Claimant’s application for leave to appeal

1.  On 31 January 2019, after a trial which took altogether 11 days, the Deputy Presiding Officer dismissed the claim by the Claimant/Applicant (“C”) against her ex‑employer (“D”) for balance of certain bonus[1] (the “Bonus”) in the total sum of HK$348,383.  He also made a costs order in the sum of HK$44,075.44 against C.  On 13 February 2019, C applied for review of that decision.  The review (the “Review”) took place on 26 March 2019.  On 23 April 2019, the Deputy Presiding Officer dismissed the application for review (the “Decision”, with written Reasons for Decision handed down on 30 May 2019 (“Reasons for Decision”)).  By her Form 14 dated 30 April 2019, C sought leave pursuant to section 32 of the Labour Tribunal Ordinance (the “Ordinance”) to appeal against that Decision, which hearing (the “Hearing”) took place before me on 12 June 2019. 

Language of this Decision

2.  The two witnesses called by D (Mr Xavier Pinneau, the Senior Director of Finance of D, and Mr Jasbir Singh, the Vice President of Applications (ERP/SCM), the former manager of the Applicant) were both English speaking.  Submissions were made during the trial and the Review by D’s representative (Miss Alexandra Papadopoulos) in English.  The Reasons for Decision is in English.  C chose to use Chinese when she filed her Form 14 and her written submissions (“C’s Submissions”).  She also used Chinese when she addressed me during the Hearing.  Despite her choice of language, given the use of English during the trial and Review, the fact that the Reasons for Decision is in English, and upon my enquiry, C told me during the Hearing that she was content that this Decision be prepared in English. 

The parties’ respective case at trial, and the issues involved

3.  The parties’ respective cases at trial, and the issues arising, were relatively clear‑cut.  As summarized by the Deputy Presiding Officer:

“ 3. It is common ground that the Bonus was calculated and payable on a quarterly basis within a fiscal year (hereinafter ‘FY’) and each FY runs from 1 June to the 31 May of the following year. In gist, C is claiming for the Bonus of FY17 and the first quarter of FY18. Firstly, she alleged that the basis upon which D calculated the Bonus was inaccurate as she argued that D should use what is known as the ‘Pipeline Analysis’ i.e. the forecast figures to calculate instead of the actual revenue. Secondly, she also argued that she should be entitled to a higher amount of Bonus in all the quarters she claimed. In this connection, she alleged that since the performance objectives for the whole financial year have already been set at the start of the financial year and not divided into quarters, and since no objectives were set at the start of each quarter, the assessment of C’s performance and contribution by her then manager Mr. Singh must be invalid or deficient.

4. On the other hand, D denied the claim in its entirely. First of all, the figures as alleged by C in the Pipeline Analysis were only targets set at the beginning of the financial year and were adjusted during the year but more importantly they were not actual revenue. D argued that only the revenue figures provided by the finance department should be used as the basis for the calculation of Bonus since those figures were actual sales which have been completed and those figures were also the subject of auditing. Further, the assessment of C’s performance and contribution of each quarter in FY17 was based on the objectives that had been set at the beginning of FY17 and these objectives were used to assess C’s performance in each quarter in FY17. According to Mr. Singh there was simply no need to set the objectives for each quarter. As for the first quarter of FY18, since there was a restructure of the team, all the other team members were arranged to follow another manager, C’s role was literally made redundant. Since C did not want to follow Mr. Keith Ip who was another manager at the material time, and she was allowed by Mr. Singh to temporarily stay in that post for a short period of time in order for C to look for new jobs, thus no objectives were set at the beginning of FY18. Mr. Singh was of the view that C was not working at all during that quarter, he therefore only awarded a nominal amount of Bonus to her.

5. All in all, payment of Bonus to each individual employee was entirely at the discretion of D based on work performance and since C’s work performance was poor during the material time and thus she was only awarded the percentage of Bonus as allocated by Mr. Singh at his discretion.

…

8. The two live issues at trial were:

i. What should be the basis of the calculation of the Bonus?

ii.   Whether Mr. Singh exercised the discretion irrationally and perversely and/or according to his own likings when allocating the Bonus as alleged by C?”

The Decision

4.  Having heard the evidence, the Deputy Presiding Officer found the defence witnesses to be honest and reliable.  He on the other hand found C to be neither honest nor reliable as a witness.  He accepted the evidence of the defence witnesses.  He ruled against C on both of the issues.  As summarized by the Deputy Presiding Officer in the Reasons for Decisions:

“ 9. …I was of the view that the evidence of the defence witnesses were to be preferred. I found that the defence witnesses gave evidence directly without exaggeration and evasion. They were unshaken under cross‑examination. The criticisms which have been made by C were untenable and none of them could affect the overall credibility and reliability of the evidence of the defence witnesses. I rule that the defence witnesses were honest and reliable witnesses. There wasn’t any unreasonableness or inherently improbability in their evidence. Even if there were discrepancies between the defence witnesses and as between their own witness statements, they were only trivial discrepancies which did not affect their overall credibility and reliability. However, on the other hand, I found that C was neither honest nor reliable as a witness. She was evasive and was reluctant to give direct answers to simple and straightforward questions under cross‑examination. Her arguments were unsupported by any objective and concrete evidence.

10. At the end of the trial, I found that the calculation of Bonus was based on the calculation as told by D’s witnesses which were calculated through actual revenue and not by mere speculation or target set at the beginning of the financial year as alleged by C. More importantly, I have also found that Mr. Singh did not exercise his discretion to allocate the Bonus irrationally and perversely. He has awarded the Bonus based on his careful consideration of C’s overall performance and contribution during each quarter and his assessment collaborated with the annual appraisal report. As for the first quarter of FY18, since C was not contributing at all as she was looking for new jobs, Mr. Singh was entitled to allocate the Bonus as he did. I ruled that C has failed to prove on a balance of probability that she should be entitled to the Bonus as claimed and her claim was dismissed with costs.

11. C was dissatisfied with the outcome of the trial and applied for review of the above decision on 13 February 2019.  Having carefully considered the submissions from both sides, I dismissed the application for review and the order made on 31 January 2019 should stand.”

5.  At paragraphs 13 to 19 of the Reasons for Decision, the Deputy Presiding Officer set out in some details C’s case and her evidence.

6.  At paragraphs 20 to 39 of the Reasons for Decision, the Deputy Presiding Officer set out in some details D’s case and the evidence of Mr Singh and Mr Pinneau.

7.  At paragraphs 40 to 40.16, the Deputy Presiding Officer set out his analysis of the evidence and explained why he rejected C’s evidence and case but accepted the evidence and case of D.  The reason, as has been summarized above, is one of credibility and reliability of witnesses. 

8.  Specifically on the question as to whether the distribution of Bonus was discretionary, I find the following observations of the Deputy Presiding Officer relevant and important:

“ 40.1.1 In her witness statement, C argued that both parties have agreed that C’s annual salary was $2,085,714. In my view, this is merely a misinterpretation or a misunderstanding of the employment contract on the part of C. According to paragraph 2 of the employment contract C‑2(1), D only offered an annual base salary of HK$1,460,000. Obviously, there was no guarantee that the Bonus would be paid to C in full in the amount of HK$625,714 on top of the base salary. A correct reading of the employment contract must be that C was only eligible to participate in the standard compensation plan and the ‘On Target Variable Earnings’ is approximately HK$625,714. This is supported by the evidence of both of D’s witnesses. Moreover, the Sales Compensation Plans for FY17 [D‑3] and FY18 [D‑5] stated clearly that D had complete discretion over the distribution of Bonus.

40.1.2   C admitted under cross‑examination that she did not look into detail of the Sales Compensation Plan Terms and Conditions of FY17 as she thought that it was just a standardized plan.  The same goes to that of FY18, she didn’t look into detail either.  And yet, she said under cross‑examination that D did not have a complete discretion to pay Bonus.  However, the above plans did specify that D had complete discretion over the distribution of Bonus [D‑3(4)].  It is obvious that she was deliberately turning a blind eye to the said important clauses.  If she had read those clauses, she would have known that the Bonus was not only based on sales revenue but also work performance.  She even said that she did not read the compensation plans until she lodged the claim.  She admitted that she had the right to read at the material time but just that she did not read them.  I find that she was not telling us the truth because she has acknowledged that she had read and agreed to be bound by the FY17 Terms and Conditions when she acknowledged receipt and acceptance of her ‘Fiscal Year 2017 Individualized Compensation Plan’ [D‑4].  One can see that her evidence is contradictory to the objective ‘black and white’ evidence which is beyond reasonable dispute.”

9.  That the Bonus was discretionary in nature is clearly borne out by the following documents:

 (a) In respect of FY17:

 (i) at p 4 of FY17 Presales Plan Terms and Conditions ^[2]:

“ Discretionary Bonus

   Presales Management has complete discretion over the distribution of Bonuses under the Plan. Distribution of Bonus payments may be made based on such factors as, but not limited to performance — individual, product, geography or the like, funding of the relevant Bonus pool and management discretion.”

 (ii) at p 5 of the same document:

“ Performance Assessment Details

Presales Management has complete discretion over the assessment, evaluation and distribution of Bonuses under the Plan. The Company may evaluate the Employee based on, but not limited to, one or more of the following components:

· Individual Performance

· Financial Performance”

 (b) In respect of FY18:

 (i) Section 11 of FY18 Sales Compensation Plan Terms and Conditions ^[3]:

“ SALES COMPENSATION

…

   Further details regarding Sales Compensation and the administration of the Plan can be found in the Sales Compensation Operating Procedures.”

 (ii) Section 10 of the FY18 Sales Compensation Operating Procedures ^[4]:

“ BONUSES

· Compensation Target Bonus:

   Individualized Compensation Agreements for Overlay Employees on a Bonus Plan (e.g. Sales Consultant, Solution Specialist, Business Development Representatives, Alliance and Channels, etc.) will indicate whether or not performance against the target of the applicable group/region/country will result in payment from a Pool. Disbursement of a Bonus under a Pool‑based Bonus Plan is discretionary based on Management assessment of an individual’s Revenue contribution, responsiveness to support of customers or other relevant considerations.”

10.  At paragraphs 41 to 42, the Deputy Presiding Officer set out his findings as follows:

“ 41. Base [sic] on the above analysis, I agree with the defence that the factors taken into account by Mr. Singh when allocating the Bonus were all relevant and more importantly not in any way capricious, arbitrary, perverse or irrational. His evidence is supported by contemporaneous objective evidence. In my view, this issue is the main issue to be determined by this Court and Court will not interfere with the allocation of Bonus which has already been paid.

42. I therefore find that C has not proven her case on a balance of probability.  Based on the above analysis, C’s claim must fail and should be dismissed.”

Relevant provisions of the Ordinance

11.  Section 20(1) of the Ordinance stipulates that the hearing of a claim shall be conducted in an informal manner.

12.  Consistent with section 20(1), the Ordinance disapplies the rules of evidence.  As stipulated in section 27:

“ Evidence

(1) The tribunal may at any time during the hearing of a claim allow a witness or a party to give evidence on oath or unsworn.

(2)     The rules of evidence shall not apply to proceedings in the tribunal, which may receive any evidence which it considers relevant.”

13.  Appeals against decisions of the Tribunal are confined to point of law or want of jurisdiction.  As stipulated in section 32:

“ (1) If any party is dissatisfied with an award, order or determination by the tribunal on the grounds that the award, order or determination is—

(a) erroneous in point of law; or

(b) outside the jurisdiction of the tribunal,

such party may, within 7 days after the date on which the award, order or determination was served on him, or within such extended time as may be allowed by the Registrar of the High Court on good cause, apply to the Court of First Instance for leave to appeal and the Court of First Instance may grant such leave.”

D’s proposed grounds of appeal

14.  C has filed her Form 14.  On the day of the Hearing, she also handed to me C’s Submissions which sought to regroup and expand upon the contents of her Form 14.  I will deal with the matters raised in her submissions in turn.

15.  Paragraphs 1, 1.1 to 1.3, 2 and 2.1 to 2.3 of C’s Submissions:

 (a) In the course of the Hearing, C confirmed to me that paragraphs 1 and 2 of C’s Submissions relate to paragraph 41 of the Reasons for Decision ^[5];

 (b) I have set out paragraph 41 of the Reasons for Decision above;

 (c) C contends that the Deputy Presiding Officer has erred in making those findings [§1 of C’s Submissions];

 (d) In support, C seeks to rely on section 11AA(1) of the Employment Ordinance [§1.1 of C’s Submissions];

 (e) S 11AA(1) provides that:

“ It shall be presumed that an annual payment or annual bonus is not of a gratuitous nature and is not payable only at the discretion of the employer unless there is a written term or condition in the contract of employment to the contrary.”

 (f) I repeat paragraphs 8 and 9 above.  I highlight in particular those written terms which are “to the contrary” in the FY17 Presales Plan Terms and Conditions, FY18 Sales Compensation Plan Terms and Conditions and FY18 Sales Compensation Operating Procedures which I have set out.  In the light of those terms, the presumption in s 11AA(1) has no application;

 (g) C seeks to argue that the Deputy Presiding Officer has misinterpreted her “Individual Compensation Plan” ^[6]. In my view, the Deputy Presiding Officer has sufficiently considered all the employment documents between C and D, and I see no point of law arising therefrom;

 (h) C seeks to argue that the Deputy Presiding Officer has ignored the implied terms of mutual trust and equality amongst staff members [§1.3 of C’s Submissions].  I do not see how those alleged implied terms were engaged;

 (i) As part of §2 of C’s Submissions, C seeks to argue that given the dispute between the parties as to whether Mr Singh was in any way capricious, arbitrary, perverse or irrational when allocating the Bonus, the Deputy Presiding Officer has failed to fulfil his duty of inquiry;

 (j) In support, C seeks to argue that the Deputy Presiding Officer has erred in accepting what C describes as false representations by Mr Singh [§2.1 of C’s Submissions];

 (k) I have stated above that the Deputy Presiding Officer has found that Mr Singh was an honest and reliable witness.  He has found that C was not.  Whether Mr Singh has made any misrepresentations is a factual matter.  No issue of law has arisen;

 (l) C seeks to argue that the Deputy Presiding Officer has failed to rule on a previous application by her for discovery of certain documents [§2.2 of C’s Submissions];

 (m) During the Hearing before me, beyond providing me with an unsigned draft which she said was her application for discovery, C failed to give me the particulars of that application.  I was not provided even with the date of the application;

 (n) I looked through the case file.  I located the application. It was dated 22 February 2018.  According to the file record, a Presiding Officer (not the Deputy Presiding Officer) on 12 March 2018 directed that the application be made in open court, and that C had been informed of that.  I see no point of law arising;

 (o) Then C seeks to argue that the Deputy Presiding Officer has misinterpreted ss 47 and 49 of the Evidence Ordinance and has wrongly admitted certain hearsay evidence [§2.3 of C’s Submissions];

 (p) I repeat section 27 of the Ordinance, that the rules of evidence shall not apply to proceedings in the Tribunal.  §2.3 of C’s Submissions is misconceived.

16.  Paragraph 3 of C’s Submissions:

 (a) C seeks to argue that the Deputy Presiding Officer has wrongly dismissed her claim for HK$66,504, that sum being the alleged shortfall of the On Target Bonus which she said she was entitled to for the period between 21 March 2016 and 31 May 2016;

 (b) This proposed ground is not in C’s Form 14, and is very vague. During the Hearing, C told me that it was made on the basis that this part of her alleged claim has not been expressly mentioned in the Reasons for Decision;

 (c) Given the Deputy Presiding Officer’s findings on credibility, and his wholesale rejection of C’s claim (and see in particular §42 of the Reasons for Decision), I am of the view that this part of C’s claim has been sufficiently covered.  I see no point of law arising therefrom.

17.  Paragraph 4 of C’s Submissions:

 (a) This paragraph concerns the right of audience of the representative of D (ie Miss Alexandra Papadopoulos) during one mention hearing;

 (b) I emphasize that the proposed ground concerns a mention hearing, but not any of the trial dates;

 (c) In the course of the Hearing, I enquired with C as to how the right of audience of the representative of D during one mention hearing could affect the results of her claim;

 (d) Having reflected on the matter, C informed me that she decided to withdraw this proposed ground.

18.  Paragraph 5 of C’s Submissions:

 (a) C seeks to argue that the Deputy Presiding Officer was of the view that D was resourceful, and that he had been unfairly biased in favor of D;

 (b) I see no basis for that proposed ground.  I do not see any point of law arising.

19.  Paragraph 6 of C’s Submissions:

 (a) It relates to the quantum of the costs which the Deputy Presiding Officer has ordered in favor of D;

 (b) Assessment of the quantum of the costs was factual matter before the Deputy Presiding Officer.  No point of law has arisen therefrom.

20.  Paragraph 7 of C’s Submissions:

 (a) C seeks to argue that Mr Singh has made misrepresentations under oath, and has committed perjury;

 (b) The Deputy Presiding Officer has found that Mr Singh was an honest and reliable witness.  He has on the other hand found that C was not.  No point of law has arisen.

Conclusion

21.  I have considered C’s Form 14, C’s Submissions and her oral submissions made before me.  I am not satisfied that any arguable point of law has been raised.  In the circumstances, I dismiss C’s application for leave.

22.  I make no order as to costs.